It may take longer than you think for Bitcoin to recover.
It’s possible that you’ll have to wait months for the price of bitcoin to rebound. Some technological experts who are trying to find a way out of the chaos have come to the same conclusion. There is a 200-week moving average of roughly $22,600, and a 200-day moving average of $35,500, below which Bitcoin has fallen since May.
It’s now been trading sideways for almost a month, and it’s getting near to the 200-week retracement level.
While Valkyrie Investments says its analysis points to an upside move, it isn’t obvious when that move will take place.
After a period of sideways trading for three to six months, Valkyrie’s research head Josh Olszewicz says that a price break upward is typically preceded by an accumulation period of three to six months around the 200-week average.
For nearly three months in late 2018 and early 2019, bitcoin’s price hovered above and below the 200-week moving average.
Olszewicz, though, cautioned that bitcoin may not rise for a year under a gloomier scenario.
Moving averages are designed to smooth out price volatility, or at least that’s the gist of it. Longer-dated moving averages are commonly used by traders to determine the next areas of support and resistance.
However, chart analysis based on previous pricing trends is far from an exact science, particularly when it comes to the young, rapid, and frenetic history of cryptography.
Other technical indicators point to a wide range of potential support levels for bitcoin, ranging from $20,000 to $12,000, suggesting that the world’s largest cryptocurrency could drop once again.
Just above its 2017 peak, but a whopping 68% down from its all-time high of $69,000, bitcoin is cruising this week.
Bitcoin may not rise for months or maybe a year, according to researchers. “Illustration/File Photo” by Reuters photographer Benoit Tessier.
As the saying goes, ‘Four steps down and one step up’
Some people believe that the recent downturn has a pattern to it.
Eddie Tofpik, head of technical analysis for ADM Investor Services International, said the market is currently in a bear channel that began in May. There appears to be a four-step down and one-step upcycle going on right now.
According to Patrick Reid, co-founder of the FX consultancy the Adamis Principle, Fibonacci retracement patterns, which try to identify support and resistance levels, indicate that bitcoin has found modest support between $19,500 and $20,000.
For the time being, Valkyrie’s Olszewicz sees $12,000 as the next level of assistance.
For cryptocurrencies like bitcoin, technical analysis has been beneficial in identifying long-term trading patterns when fundamental drivers are lacking.
For example, on December 10, a very well “death-cross” chart pattern predicted the subsequent bitcoin drop. The 200-day moving average acted as a strong barrier at the beginning of January.
The implosion of stablecoin TerraUSD, as well as its linked token Luna and the subsequent collapse of hedge fund Three Arrows Capital, demonstrated the hazards of such tactics this year.
Spot cryptocurrency trade on major exchanges fell by 27.5% in June to $1.41 trillion, its lowest level until December 2020, according to research firm CryptoCompare’s findings.